Syria is fully reconnected to a rapid international payment system “in a few weeks,” the country’s new central bank governor said it will link the country to the world economy after 14 years of war and sanctions, and sanctions that made it a pariah state.
Swift’s revival is the first major milestone in the new government’s liberalization overhaul of Syria’s economy, and is a sign that new authorities are moving rapidly to seduce international trade and investment after the US lifted sanctions last month.
In an interview in Damascus, Hasley of central bank Abdulqadar detailed the roadmap for restructuring the country’s financial system and monetary policy to rebuild the potential economy. He wants to regain foreign investment, remove barriers to trade, normalize currency and reform the banking sector.
“We aim to strengthen the country’s brand as a financial hub, as we expect reconstruction and foreign direct investment in infrastructure. This is extremely important,” Husrieh told the Financial Times. “There have been a lot of progress, but there’s still a lot of work to do.”
Syrian central bank chief Abdulkader Hasley plans to reform the banking law and central bank © Hasan Belal/ft
Syria has been blocked from the global market since 2011, when then-President Bashar al-Assad slammed a mass uprising and sparked a full-scale civil war. When Assad was defeated by Ahmed al-Sharaa and his rebel alliance last December, the economy emitted free falls and national funds.
Many experts questioned whether armed men with little experience not running the state could save it. However, within weeks of taking power, the new leaders anticipated free market reforms to Assad’s strictly controlled economy, as well as inclusion and transparency, and initially supported foreign investors who were wary of doing business with Islamist rebels.
Interim President Shara has built on that momentum and has secured widespread support for his fledgling government from avid global forces to ensure the stability of the country, despite the temporary violence that undermined the transition. He received a huge boost last month when President Donald Trump unexpectedly lifted sanctions.
Husrieh, who started his new job in April, said that while it was a welcome step, “a complete policy shift is still needed.” “So far, we’ve only seen license issuance and the removal of selective sanctions. The implementation must be comprehensive, not ad hoc.”
Hasley, a technocrat and a longtime consultant who helped write some of Syrian financial laws under Assad, has worked with the Ministry of Finance on a “6-12 month stabilization plan.” This includes reforms to banking laws and central banks, as well as overhauls of social security and housing funds to encourage Syrians in the diaspora to invest in the country.
The public banking sector is already fully supported by the government, but Abdulqadar’s Husley is about to establish a state institution to guarantee deposits of private banks ©Hasan Belal/FT
The banking sector is key to reconstruction, and has been significantly disrupted due to war, the 2019 financial crisis in neighbouring Lebanon, and punishments from Assad-era policies. Husrieh wants to end the legacy of the interventionist of the Assad administration and restore lending ability, transparency and trust.
“Central banks previously microcontrolled the financial system, overregulated lending and restricted deposit withdrawals,” he said. “We aim to reform the sector by recapitalizing, deregulation and reestablishing our role as a financial intermediary between households and businesses.”
Swift’s returns will help promote foreign trade, reduce import costs and promote exports, he said. It also brings much-needed foreign currency to the country, strengthens anti-money laundering efforts, and eases reliance on informal financial networks for cross-border trade.
“The plan is that all foreign trade will be routed through the formal banking sector,” Husley said. He said that the banks and central banks have been assigned prompt codes, and “the rest of the steps are for the correspondent bank to resume processing transfers.”
Foreign investment will also be strengthened by guarantees, he said. The public banking sector is already fully supported by the government, but Fusley is looking to establish a state institution to guarantee deposits for private banks.
Before Assad’s expulsion, the Syrian pound had lost about 90% of its value against the dollar. It has been strengthened since then, but remains unstable, leaving a difference between the official and black market rates. Husrieh said he is aiming to unify the rates and is “moving to a managed float” for the pound.
Shara’s biggest challenge is to turn the economy around with many countries abolishing and reconstructing costs hundreds of billions of dollars. Syria sent a delegation to Syria last week, and a delegation to the World Bank, and began consultations with the IMF, which is seeking support from regional countries.
Saudi Arabia and Qatar have pledged to the World Bank last month to clear Syria’s $15.5 million outstanding debt and pledged to pay at least three months of public sector salaries. Syria has also signed initial agreements with companies in the UAE, Saudi Arabia and Qatari on key infrastructure and electricity projects.
The country’s leaders have decided not to take away the loan, Hasley said. However, the banks and the Treasury are investigating whether Syria will be able to issue the first Sukuk, an Islamic financial certificate compliant with religious laws that ban profits, for the first time.
It also accepts grants, including $146 million from the World Bank and $80 million from Sweden to rehabilitate schools and hospitals.
